Dy.CIT, Circle-3(3), Hyderabad V. M/s. Visista Estates Pvt.Ltd., Hyderabad

ITA 978/HYD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91547 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 22-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Assessee Lawyers: M CHANDRAMOULESWARA RAO
• Keywords: Gift; Source of fund
• Section: 68; 263; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC : HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER ITA.NO.978/HYD/2014 ASSESSMENT YEAR 2009 - 2010 SMT. BIKKASANI VANALATHA, PALONCHA, KHAMMAM DIST., PAN AHWPB2572F VS. THE INCOME TAX OFFICER WARD - 2 KOTHAGUDEM. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. M. CHANDRAMOULESWARA RAO FOR REVENUE : SMT. G. APARNA RAO DATE OF HEARING : 27 .03.2015 DATE OF PRONOUNCEMENT : 08 .0 4 .2015 ORDER PER P.M. JAGTAP, A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT, VIJAYAWADA DATED 19.03.2014 PASSED UNDER SECTION 263 OF THE ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL WHO IS ENGAGED IN THE BUSINESS OF RUNNING A MEDICAL SHOP. T HE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 27.11.2009 DECLARING TOTAL INCOME OF RS.1, 92,020. IN THE ASSESSMENT COMPLETED BY THE A.O. UNDER SECTION 143(3) VIDE ORDER DATED 14.12.2011, THE INCOME AS DECLARED BY THE ASSESSEE IN T HE RETURN OF INCOME WAS ACCEPTED BY THE A.O. THE RECORD OF THE SAID ASSESSMENT SUBSEQUENTLY CAME TO BE EXAMINED BY THE LD. CIT AND ON SUCH EXAMINATION, HE FOUND THAT THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED BY THE A.O. WITHOUT MAKING PROPER AND AD EQUATE ENQUIRIES, AS WARRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE, ON 2 ITA.NO.978/HYD/2014 SMT. BIKKASANI VANALATHA, PALONCHA, KHAMMAM DISTRICT. CERTAIN ISSUES. HE, THEREFORE, ISSUED A NOTICE UNDER SECTION 263 IN RESPONSE TO WHICH THE FOLLOWING POINT - WISE REPLY WAS OFFERED BY THE ASSESSEE. 2.1. THE FIRST ISSUE RAISED I N THE SHOW CAUSE NOTICE UNDER SECTION 263 IS AS UNDER : AS PER BALANCE SHEET, THE ASSESSEE HAS ACQUIRED THE FOLLOWING PROPERTIES DURING THE FINANCIAL YEAR, RELEVANT FOR ASSESSMENT YEAR 2009 - 10 : I. 1579/2008 705.33 SQ. YDS 4,63,645 II. 1693/2008 AC.12 5,20,855 III. 412/2009 3310 SQ. YDS (30%) 3,34,380 IV. 953/2000 7381 SQ. YDS (30%) 8,36,745 THE SOURCES FOR THE INVESTMENT IN THE ABOVE ASSETS WERE EXPLAINED AS GIFTS RECEIVED FROM VARIOUS RELATIVES VIZ., RS.11,00,000/ - FROM SRI B. SUDHAKARA RAO (HUSBAND), RS.6,50,000/ - FROM SMT. N. SUNEETHA (MOTHER), RS.6,00,000/ - FROM SMT. A. RAJANI KUMARI (SISTER - IN - LAW), RS.2,00,000/ - FROM SRI N. VENKATESWARA RAO (FATHER) ETC. FROM THE CONFIRMATION LETTERS ON RECORD AND ITS CONTENTS IT IS CLEAR THAT THE A .O. HAS NOT EXAMINED THIS ISSUE AS IT SHOULD HAVE BEEN VIZ., OCCASION FOR THE GIFT AND ITS ASSOCIATED ISSUES, GENUINENESS OF THE TRANSACTION ETC., 2.2 REPLY OF THE ASSESSEE ON FIRST ISSUE IS AS UNDER : THE ASSESSEE SMT. BIKKASANI VANALATHA HAD ACQUIRED VARIOUS PROPERTIES IN HER NAME FROM HER SOURCES OF INCOME AND FROM THE GIFTS RECEIVED BY HER FROM HER CLOSE RELATIVES. ALL THE GIFTS WERE MADE TO HER FOR PURCHASE OF THE SAID PROPERTIES WHICH HAVE BEEN DISCLOSED BY HER IN HER RETURN OF INCOME . THE DONORS HAD MADE THE GIFTS WITH LOVE AND AFFECTION ON HER. WE HAVE PRODUCED ALL THE RELEVANT DOCUMENTS FOR EVIDENTIATING THE SAID GIFTS WHILE AT THE TIME OF ASSESSMENT PROCEEDINGS FOR THE A.Y. 2009 - 10 BEFORE THE A.O. WARD - 2, KOTHAGUDEM. ALL THE GIFTS RECEIVED BY THE ASSESSEE ARE GENUINE TRANSACTIONS AND THE OCCASION FOR MAKING THE SAID TRANSACTION IS FOR PURCHASE OF THE PROPERTIES. 3 ITA.NO.978/HYD/2014 SMT. BIKKASANI VANALATHA, PALONCHA, KHAMMAM DISTRICT. 3 . THE SECOND ISSUE RAISED IN THE SHOW CAUSE NOTICE UNDER SECTION 263 IS AS UNDER : THE ASSESSEE HAS PAID AN AMOUNT OF RS.1,11,000/ - TOWARDS CHIT SUBSCRIPTIONS AND REPAID UNSECURED LOAN OF RS.1,00,000/ - . THE A.O. HAS NOT EXAMINED THE SOURCES FOR THE PAYMENTS OF SUBSCRIPTIONS AND LOAN. 3.1. REPLY OF THE ASSESSEE ON THE SECOND ISSUE IS AS UNDER : THE CHIT SUBSCRIPTION MADE OF RS.1,11,000/ - AND THE LOAN REPAYMENT MODE OF RS.1,00,000/ - THESE TWO TRANSACTIONS MADE FROM THE ASSESSEES OWN SOURCE OF INCOME AND FROM THE SOURCES OF GIFTS RECEIVED. THE SOURCES WERE EXPLAINED IN DETAIL IN THE CAPITAL A/C OF THE ASSESSEE SHOWN I N THE LIABILITIES SIDE OF THE BALANCE SHEET AS ON 31.03.2009. HENCE, THIS IS TO SUBMIT BEFORE YOUR KIND SELVES THAT THE TRANSACTIONS ARE GENUINE AND NOT ERRONEOUS AND IT NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE SCOPE OF SECTION 263 OF THE INCOME TAX ACT. 4 . THE LD. CIT DID NOT FIND THE REPLY FILED BY THE ASSESSEE TO BE ACCEPTABLE. ACCORDING TO HIM, ALTHOUGH THE CONFIRMATION LETTERS OF THE DONORS WERE PLACED ON RECORD BY THE ASSESSEE, THE CONTENTS THEREOF WERE NOT SUFFICIENT TO EXPLAIN THE GIFTS IN TERMS OF SECTION 68 SATISFACTORILY. HE HELD THAT FURTHER ENQUIRIES OUGHT TO HAVE BEEN DONE BY THE A.O. TO ASCERTAIN THE GENUINENESS OF THE RELEVANT TRANSACTIONS AND SINCE THE SAME WAS NOT DONE BY THE A.O. HE HELD THAT THE ORDER OF THE A.O. WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE LD. CIT ALSO HELD THAT THE SOURCE OF PAYMENT MADE BY THE ASSESSEE TOWARDS CHIT SUBSCRIPTION AND REPAYMENT OF UNSECURED LOAN WAS NOT EXAMINED BY THE A.O. BY MAKING PROPER AND SUFFICIENT ENQUIRY AND THIS AGAIN MADE THE ORDER OF THE A.O. ERRONEOUS AS WELL AS PREJUDICIAL TO THE 4 ITA.NO.978/HYD/2014 SMT. BIKKASANI VANALATHA, PALONCHA, KHAMMAM DISTRICT. INTERESTS OF THE REVENUE. ACCORDINGLY, HE SET ASIDE THE ORDER PASSED BY THE A.O. UNDER SECTION 143(3) WITH A DIRECTION TO THE A.O. TO RE - DO THE SAME AFTER MAKING PROP ER AND SUFFICIENT ENQUIRES ON THE ISSUES POINT ED OUT BY HIM IN ACCORDANCE WITH THE LAW AND FOLLOWING THE ESTABLISHED PROCEDURE. AGGRIEVED BY THE ORDER OF THE LD. CIT PASSED UNDER SECTION 263, ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE CLAIM OF THE ASSESSEE FOR HAVING RECEIVED GIFTS FROM THE CONCERNED FIVE DONORS WAS ACCEPTED BY THE A.O. ON THE BASIS OF CONFIRMATION LETTE RS OF THE SAID DONORS FILED BY THE ASSESSEE. AS PER THE DIRECTIONS GIVEN BY US, THE LD. COUNSEL FOR THE ASSESSEE HAS FILED THE COPIES OF THE SAID CONFIRMATION LETTERS ON RECORD BEFORE US AND PERUSAL OF THE SAME SHOWS THAT EVEN THE RELEVANT DETAILS SUCH AS MODE OF PAYMENT, PERMANENT ACCOUNT NUMBER OF THE DONORS/CREDITORS ETC., WERE NOT GIVEN IN THE CONFIRMATION LETTERS. ALTHOUGH, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ALL THESE DONORS ARE REGULARLY ASSESSED TO TAX AND HAS ALSO INVITED OUR ATTENT ION TO THEIR INCOME TAX RETURNS FOR THE RELEVANT YEAR, THERE IS NOTHING ON RECORD OR EVEN IN THE ASSESSMENT ORDER TO SHOW THAT THE INCOME TAX RETURNS OF THE CONCERNED DONORS WERE CALLED FOR BY THE A.O. OR FILED BY THE ASSESSEE. IN MY OPINION, THE CONFIRMAT ION LETTERS FILED BY THE ASSESSEE WERE NOT SUFFICIENT TO DISCHARGE THE PRIMARY ONUS THAT LAY ON THE ASSESSEE TO EXPLAIN THE RELEVANT CASH CREDITS IN TERMS OF SECTION 68 AND THERE WAS AN ERROR IN THE ORDER OF THE A.O. PREJUDICIAL TO THE INTERESTS OF THE REV ENUE IN ACCEPTING THE CLAIM OF THE ASSESSEE OF HAVING RECEIVED THE GIFTS IN QUESTION WITHOUT MAKING PROPER AND ADEQUATE ENQUIRES AS WERE CALL ED 5 ITA.NO.978/HYD/2014 SMT. BIKKASANI VANALATHA, PALONCHA, KHAMMAM DISTRICT. FOR IN THE FACTS AND CIRCUMSTANCES OF THE CASE. I ALSO FIND THAT SIMILARLY THE SOURCE OF FUNDS FOR MAKING PAYMEN T TOWARDS CHIT SUBSCRIPTION AND REPAYMENT OF UNSECURED LOAN WAS NOT EXAMINED BY THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS THERE IS NOTHING ON RECORD TO SHOW THAT ANY QUERY WAS RAISED BY HIM IN THIS REGARD OR ANY REPLY WAS FILED BY THE ASSESSE E WHICH WAS FOUND ACCEPTABLE BY THE A.O. ON APPLICATION OF MIND. IN MY OPINION, THE ASSESSMENT UNDER SECTION 143(3) IN THE CASE OF THE ASSESSEE THUS WAS COMPLETED BY THE A.O. FOR THE YEAR UNDER CONSIDERATION WITHOUT MAKING PROPER AND ADEQUATE ENQUIRIES AS WARRANTED ON THE FACTS AND CIRCUMSTANCES OF THE CASE ON THE TWO ISSUES AS RIGHTLY POINTED OUT BY THE LD. CIT CALLING FOR REVISION UNDER SECTION 263. IN THAT VIEW OF THE MATTER, I UPHOLD THE IMPUGNED ORDER OF THE LD. CIT PASSED UNDER SECTION 263 SETTING AS IDE THE ORDER PASSED BY THE A.O. UNDER SECTION 143(3) WITH A DIRECTION TO RE - DO THE ASSESSMENT AGAIN ON THE ISSUES POINTED OUT BY HIM IN ACCORDANCE WITH LAW BY FOLLOWING THE ESTABLISHED PROCEDURE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 8 .04.2015. SD/ - (P.M. JAGTAP) ACCOUNTANT MEMBER DATED 0 8 APRIL, 2015. VBP/ - 6 ITA.NO.978/HYD/2014 SMT. BIKKASANI VANALATHA, PALONCHA, KHAMMAM DISTRICT. COPY TO 1. SMT. BIKKASANI VANALATHA, PALONCHA, KHAMMAM DISTRICT. C/O. MR. M. CHANDRAMOULESWARA RAO, CHARTERED ACCOUNTANT, C. - 3, SKYLARK APARTMENTS, BASHEERBAGH, HYDERABAD 29. 2. THE INCOME TAX OFFICER, WARD - 2, KOTHAGUDEM. 3. THE COMMISSIONER OF INCOME TAX, VIJAYAWADA. 4. ADDL. COMMISSIONER OF INCOME TA X, KHAMMAM RANGE, KHAMMAM. 5. D.R. ITAT SMC BENCH, HYDERABAD. 6. GUARD FILE.